Too-big-to-fail bank names by Aug '15: RBI

Around four to six large banks are set to be classified as ‘systemically important’ by the RBI from August 2015 and will be subject to higher capital requirement and intense regulation.

TNN | Jul 23, 2014, 06.15 AM IST

MUMBAI: Around four to six large banks are set to be classified as 'systemically important' by the RBI from August 2015 and will be subject to higher capital requirement and intense regulation.

Systemically important is the term used by the RBI to describe institutions that are considered too big to fail as allowing a failure would cause a crisis in the financial system. Such large banks will be subject to intense regulation and higher capital requirements.

Following the Lehman Brothers crisis, the Basel Committee on Banking Supervision — a panel of central bankers worldwide — prescribed a regulatory framework to deal with domestic systemically important banks (D-SIBs). The indicators which would be used for assessment are: size, interconnectedness, substitutability and complexity. Based on these parameters State Bank of India, HDFC Bank and ICICI Bank are widely expected to be among the D-SIBs.

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